Strong profits and a larger property portfolio

Strong profits and a larger property portfolio

Interim Report January - March 2011


  · Net sales increased by 5 per cent to SEK 601 (571) m, and gross
profit of SEK 354 (355) m was in line with the previous year.
  · Profit before tax was SEK 551 (36) m. Profit after tax was SEK 406
(58) m, equivalent to SEK 3.00 (0.40) per share. The profit increase is
due to value changes on properties and financial instruments.
  · As of 31 March 2011, the property portfolio comprised 629 (592)
properties with a book value of SEK 25,540 (21,501) m.
  · 38 (0) properties were purchased for SEK 3,825 (0) m. 2 (30)
properties were also sold for SEK 5 (602) m, generating a profit of SEK
3 (3) m. These sales affected profit for calculating dividends by SEK 3
(28) m.
  · Profit for calculating dividends for the interim period was SEK 78
(126) m, equivalent to SEK 0.60 (0.90) per share.
  · The estimated profit for calculating dividends for the full year
2011 is unchanged at SEK 650 m, or SEK 4.80 per share.

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“In business terms, the first quarter progressed as planned, producing
profit before tax of SEK 550 m, against SEK 36 m in the corresponding
quarter of last year. The main explanation for the profit improvement
was positive value changes in the public property portfolio, but also on
our financial instruments.

Sales grew by nearly SEK 30 m to just over SEK 600 m. The increase is
wholly due to a sharp increase in module sales. In addition, Nordic
Modular Group achieved strong order intake in module production and
module leasing during the first quarter, which have not yet fed through
to profits. Rental revenue and operating net were somewhat lower due to
our portfolio being slightly smaller than last year. Underlying
operations progressed stably.

Kungsleden is a company in constant regeneration and change. In the past
year, our commercial portfolio secured a more prominent role after Hemsö
became an independent company. But our business model rests on the same
footing as before. In the first quarter this year, we relocated
Kungsleden's head office and Hemsö to new addresses.

We sold two properties for SEK 5 m in the quarter, while acquiring the
majority of Nordic & Russia Properties' portfolio, and some other
smaller properties, totalling 38 properties, for just over SEK 3.8 bn at
an average property yield of 9.9 per cent. These transactions increase
annualised profit for calculating dividends by approximately SEK 200 m.
Despite large-scale property acquisitions, we achieved a good
equity/assets ratio for Kungsleden of 27 per cent at the end of the
quarter.

Administration costs increased somewhat, due to factors including
Kungsleden and Hemsö now having separate organisations and premises. We
incurred some costs in tandem with relocating to a new head office and
for the take-over of Nordic & Russia Properties. We expect somewhat
higher administration costs in 2011 as a result of the division of Hemsö
and Kungsleden, and that the property portfolio is larger.

The first quarter saw a severe winter with heavy snowfall, and the
associated costs. But the lettings market remains healthy and my view is
that vacancy levels will decrease somewhat further in the year. Nordic &
Russia Propertie's portfolio has a vacancy level of only 5 per cent,
which means that our overall vacancy level will reduce.

Kungsleden advanced to third-best workplace of Sweden's mid-sized
organisations, and was the best of the property companies in the Great
Place to Work survey. In research conducted by Universum, we were
recognised as the Best Improver of the Year, and nominated as Employer
of the Year. Accordingly, we enjoy good prospects to really welcome our
new people from Nordic & Russia Properties, and to integrate this large
portfolio with its total rental value of just over SEK 560 m.”

Thomas Erséus
Chief Executive

 

For more information, please contact:

Thomas Erséus, CEO Kungsleden | phone +46 (0)8 503 052 04 | mobile +46
(0)70 378 20 24
Johan Risberg, Deputy CEO Kungsleden | phone +46 (0)8 503 052 06 |
mobile +46 (0)70 690 65 65